Sunday, January 30, 2011

Rupert Murdoch’s News Corp. is planning to launch The Daily, the media tycoon’s exclusive digital newspaper for the iPad, in New York on Wednesday.

News Corp. on Thursday invited reporters to a February 2 launch event at the Guggenheim Museum that will feature Murdoch along with Apple vice president of Internet services Eddy Cue.

The debut of The Daily had originally been slated for mid-January, but was delayed reportedly to allow Apple more time to tweak its new subscription service for publications sold through its iTunes online store.

Rupert Murdoch has extended his stay in London to deal with the phone-hacking crisis. Photograph: Richard Clement/Reuters

Many people in the UK will not have heard of Prince al-Waleed bin Talal. But perhaps they should have done. The prince has a lot of money invested in the UK and wields considerable, albeit discreet, influence.

The 55-year-old nephew of Saudi Arabia's King Abdullah is a multibillionaire who, through his investment company, Kingdom Holdings, has taken large chunks of companies as diverse as the Savoy Hotel Group and London's Canary Wharf.

Bin Talal's power stems from his unique position. He is one of the few people who can tap the giant Saudi sovereign funds for money, so his every word is analysed forensically by the markets.

Last week, though, it is likely that the prince, described by Time magazine as "the Arabian Warren Buffett", was devoting more than a passing interest to his almost 7% share in Rupert Murdoch's News Corp, quietly accumulated over several years.

The prince cannot have liked what he saw.

What had started out as a very British row over phone hacking by reporters working on Murdoch's News of the World had become infectious and was in danger of going global.

As scores of new victims emerged to allege they had been hacked by the newspaper, MPs voiced fresh concerns at the police handling of the affair and the role played by senior executives at News International, News Corp's UK subsidiary and the ultimate parent company of the News of the World, the Sun, the Times and the Sunday Times.

Meanwhile, back across the Atlantic, it emerged that News Corp was facing another problem.

Last week 400 rabbis from all the main branches of Judaism in the US bought a full-page ad in the Wall Street Journal, calling on Murdoch to take sanctions against News Corp's Fox News subsidiary.

The rabbis were incensed at the way that Fox commentators regularly referred to those with whom they disagreed as "Nazis".

"You diminish the memory and meaning of the Holocaust when you use it to discredit any individual or organisation you disagree with. That is what Fox News has done in recent weeks," the ad read.

The placement of the ad was even more poignant and shocking as it was published on Holocaust Remembrance Day.

It came partly in response to comments by Murdoch's brash Fox News leader, Roger Ailes, who had compared executives at National Public Radio to Nazis after they sacked a commentator who made ill-advised remarks about being scared of flying with Muslims.

But it also focused on the most controversial figure in the pantheon of Fox News personalities: Glenn Beck. Fox's biggest star repeatedly uses Nazi and Hitler references to describe figures he does not like.

Deborah Lipstadt, professor of Holocaust studies at Emory University, Atlanta, Georgia, has been especially vocal in attacking Beck's tactics. "I haven't heard anything like this on television or radio – and I've been following this kind of stuff. I've been in the sewers of antisemitism and Holocaust denial more often than I've wanted," she said.

Those familiar with bin Talal, who has given tens of millions of dollars to charities seeking to bridge gaps between western and Islamic communities, say he will have been dismayed by any whiff of controversy threatening his business interests.

"He is an incredibly intelligent man and deeply honourable; you can only speculate about what he must be thinking now," said an acquaintance.

Coming at a time when News Corp wants regulatory approval to take over British satellite broadcaster BSkyB, both the phone-hacking scandal and the row with the rabbis are damaging not only to the company's reputation but its bottom line.

Liberal commentators have used both to question whether Murdoch should be allowed to own more of the British media landscape.

Murdoch must have hoped the BSkyB deal would have been waved through by now, but the culture secretary, Jeremy Hunt, has postponed making a decision to see if remedies can be found to avoid a long Competition Commission inquiry.

Hunt is in an invidious position, having previously expressed a view that the deal would not make a substantial difference to the plurality of the British media.

An approval is likely to see Labour scream blue murder but, even before a decision has been reached, it is having political consequences.

Andy Coulson, the News of the World's former editor, resigned this month as the prime minister's director of communications, saying that persistent allegations of mobile-phone hacking occurring on his watch made it impossible for him to do his job.

His resignation was interpreted in some quarters as an attempt to take the heat off Murdoch at a crucial time in News Corp's bid for BSkyB.

Further revelations that Cameron and James Murdoch, the Europe and Asia chief of News Corp, had been dinner guests at the Cotswolds home of News International chief executive Rebekah Brooks over Christmas provided ammunition to those who claim No 10 is too close to the media empire.

That relationship looked set to become more apparent last week when Murdoch flew into the UK to hold urgent meetings with senior executives at News International.

There were rumours that Cameron and Murdoch were due to hold a brief, informal meeting later in the week in the Swiss ski resort of Davos, home to the World Economic Forum, but that this was called off when the News Corp boss decided to stay in London to deal with the phone-hacking scandal.

"He will be thinking all of this should have been sorted out long ago," said someone familiar with the thinking of the News Corp board. "He'll want to know why Rebekah has not closed this down."

Why News Corp is so eager to bag BSkyB was plain to see last week, when the broadcaster reported pre-tax profits of £467m, up a stunning 26% on the previous year.

But for Murdoch, BSkyB's profits came with a sting attached.

As analysts at City brokers Charles Stanley Research note: "Our best guess is that clearance [for the News Corp takeover of BSkyB] will be granted, although perhaps only after a lengthy further investigation by the Competition Commission and/or the implementation of certain 'remedies'.

"We would expect a formal offer to subsequently be forthcoming from News Corp, although the continued strong financial performance of the business means the board of BSkyB may feel obliged to demand a price well in excess of its previously stated minimum acceptable level of 800p."

This demand is inevitable unless Crispin Odey, the powerful hedge fund manager who owns 3% of BSkyB and is often referred to as the "David Beckham of the City" because of his winning investments strategies, has dramatically changed his mind.

Odey, whose views will be listened to closely by members of the BSkyB board, told analysts last June that "even at 800p [the price BSkyB has been demanding] this company is undervalued.

We should hold out against this bid. This is a company I want to own."

He added: "I've loved the Sky story for five years and now, just as the cash-flow and growth is coming through, we shouldn't sell it. If shareholders sell at this level, in two years' time we are going to look back and say 'Rupert got this for a steal'."

Just to add piquancy to Odey's comments, it should be remembered that he was once married to Murdoch's daughter, Prudence.

As Murdoch waits in regulatory purgatory and hedge fund managers push BSkyB's share price north – a move that could see News Corp having to stump up as much as £1bn more than it expected – the media giant's investors are said to be growing restless.

A full News Corporation board meeting is believed to have been scheduled for Wednesday.

The phone-hacking scandal and the BSkyB deal are expected to be high on the agenda. Bin Talal, who simply "does not lose money" according to someone who knows him well, is likely to pay very close attention to what is discussed.

Worryingly for Murdoch, who is used to his investors taking a back seat, the prince is a far from passive backer.

As a sizable investor in bombed-out banking giant Citigroup, bin Talal has been vocal in calling for its management to improve the firm's fortunes, warning its chief executive last year that the "honeymoon was over".

Murdoch may soon find himself receiving similar encouragement if the BSkyB bid falters. It is an unpalatable prospect for an autocrat.

KEY PLAYERS

Main shareholders in News Corp (after the Murdoch family)

Kingdom Holdings 7%

Taube Hodson Stonex Partners 2.29%

Invesco 1.73%

Bank of New York Mellon Corporation 1.15%

Goldman Sachs 0.87%

Dimensional Fund Advisors 0.75%

MFC Global Investment Management 0.48%

Axa 0.45%

Clearbridge Advisors 0.38%

Blackrock Group 0.35%

Shareholdings based on statements by Kingdom Holdings and in News Corp filings September 2010.

With his British media empire embroiled in three separate crises at once – its biggest challenge since he moved the company to Wapping 25 years ago this week – the News Corporation chief turned up for lunch in the staff canteen with his key executives by his side.

Around the table sat his son James– the head of News Corp's European and Asian operations – Rebekah Brooks, the chief executive of its British newspaper division News International, plus the editors of the Sun and the Times, Dominic Mohan and James Harding respectively. Meatballs were on the menu, although staff preferred not to get too close to see what the boss actually ate.

In the words of one friend, Murdoch was "frustrated, but ready to be decisive" by the failure to resolve the News of the World phone-hacking crisis, which had claimed the scalp of his former editor and No 10 spin doctor Andy Coulson. The plan had been to travel to Davos in midweek for the World Economic Forum, but Murdoch wanted to deal with both the hacking and the status of his £8bn bid for the 61% of BSkyB that News Corp does not own.

It turned out there would be no respite as the week wore on, with each day bringing fresh revelations about hacking, progress in the bid negotiations – and a curveball in the form of the Sky Sports sexism row. The trip to Davos had to be abandoned. But what was also clear was that Murdoch – who turns 80 in a couple of months – was not yet ready to insist that senior heads had to roll to bring the hacking crisis to a close.

While senior executives and editors are rarely seen in the canteen otherwise, Murdoch himself is a regular – lunching with various members of his management in sight of journalists at least once whenever he is London, which is usually about six times a year. The meeting was quickly interpreted as a show of support at a time when there are cracks at Wapping over how to handle the hacking saga.

Insiders say the pressure has opened up faultlines within his business.

Divisions are said to have opened up between James Murdoch, whose background running Sky makes him the lead executive when it comes to seeing the £8bn bid past politicians and regulators, and Brooks and her ally, former Daily Telegraph editor Will Lewis, who is now group general manager at News International, co-ordinating the papers' spending.

Complicating the picture further is the presence of Elisabeth Murdoch and her husband, PR man Matthew Freud. Elisabeth has not worked for News Corp or Sky for 10 years, leaving to form her own independent television production business, Shine. But Shine is now likely to be bought or partly bought by News Corp, bringing her closer into the family fold.

Although she remains close to James and has little interest in a bigger job at News Corp – wanting to enlarge Shine further – her management style is noticeably less combative than her brother's – a significant distinction at a time when News Corp is short of allies in the British media.

Internal critics, meanwhile, accuse James Murdoch of being slow to engage with the hacking saga – leaving the company trapped in a policy of outright denial because he was so focused on the bid for Sky – while Brooks wants to be seen to be getting on top of it by demonstrating willingness to investigate new evidence that emerges from cases against the News of the World (NoW).

The efforts of Brooks and Lewis have – so far – largely consisted of investigating and suspending Ian Edmondson, the NoW assistant editor (news), whose name cropped up in notebooks belonging to Glenn Mulcaire, the private investigator jailed for hacking into phones of royal aides in 2007.

Once he arrived, one of Rupert Murdoch's early tasks was to review the evidence against Edmondson, and decide what to do next.

But on his first morning in the Wapping office, unexpected news was developing.

Andy Gray and Richard Keys, the stars of Sky Sports's football coverage, were recorded making sexist comments about assistant referee Sian Massey.

Gray and Keys were suspended by lunchtime, a decision which Jeremy Darroch, the chief executive of Sky, said he was involved with. Gray's position was all the more sensitive because he was also suing the NoW over alleged phone-hacking.

It is not clear if Murdoch was involved in the suspension – but he is likely to have been involved with Tuesday's splash story in the Sun, which made light of the row with a picture of Massey, 25, dancing at a party accompanied by the headline: "Get 'em Off: Sexist pundits axed from TV".

However, by the time the Sun front page had been drawn up there was a further development. News Corp already knew its bid for Sky was unlikely to get past the culture secretary, Jeremy Hunt, at the first time of asking, following private correspondence with Hunt's team the week before.

Murdoch's arrival, though, turned out to be handily timed, because on Monday afternoon he was informed that Hunt would make an announcement about the status of the bid the next morning shortly after 7am.

So as the Sun was picked up from doormats around the country on Tuesday, Hunt announced to the country that News Corp's bid for Sky "may operate against the public interest" because of its impact on media plurality.

However, in a surprise twist, before he referred the deal to the Competition Commission for further examination, Hunt said he would consider an offer of "undertakings" from News Corp – an offer to provide guarantees of the editorial independence of Sky News. It was a partial victory for Murdoch, a past master at negotiating with politicians and regulators. He had just avoided a six-month-long referral, at least while a modest concession was considered by Hunt.

Any respite gained from that, though, was limited. By Tuesday, a review of Edmondson's case file and emails had concluded and – in a decision almost certainly overseen by Murdoch – it was decided that day to fire him. To add to the excitement, Gray had also been sacked by Sky, after footage emerged on the internet of him asking co-presenter Charlotte Jackson to tuck a microphone down his trousers.

Wednesday's Sun was much harsher on Gray, describing a "toe-curling sexist suggestion" to Jackson. Meanwhile, the information obtained from Edmondson's emails was passed to the Metropolitan police. On Wednesday afternoon the Met said it had received "significant new information" that meant that it had to reopen its hacking investigation.

Yet, if Murdoch was quietly controlling the agenda, he still chose to abandon the Davos trip.

Going would have been a clear signal that it was business as usual despite the phone-hacking row, but with allies saying he is "mid-process" – as in part of the way towards resolving the issue – he deferred leaving until this weekend.

At the same time, although Murdoch is highly respected as the News Corp chief executive, his sustained presence is rarely welcomed because he is so keen to involve himself in all sorts of detail.

There was a clear example of that on Wednesday when Murdoch, with Brooks, went to the Times's morning editorial conference.

While his presence at the Sun is regular and frequent when he is in Wapping, he rarely visits the Times in person. However, a recent move means the Times is no longer across the road from his office, but just a few floors down in the lift.

True to his newspaper roots, Murdoch offered opinions on various news items. But it was when he referred to the Andy Gray story that eyebrows were raised. First he said "this country has lost its sense of humour" and anything Gray said was "not worse that what women say about other women".

When reminded that Gray had been sacked, Murdoch silenced the meeting, saying: "There are other reasons for sacking Andy Gray." Later that day, News Corp confirmed the other reasons referred to Gray's remarks to Charlotte Jackson.

When Murdoch bought the Times and Sunday Times in 1981, he agreed, as a condition of the takeover, to be bound by a group of editorial undertakings in which he committed to "in all respects to maintain the titles as editorially independent newspapers of high quality" in which "editors will not be subject to instruction from either the proprietor or the management on the selection and balance of news and opinion". Murdoch wants to attach similar undertakings to Sky News, but his presence at the Times show that whatever conditions are in place he is still prepared offer firm opinions.

News of Murdoch's appearance did not leak until later that day, when it was picked up on the Guido Fawkes website, but once it had reached the public domain, the mood at Wapping changed, becoming more hostile on Thursday.

Efforts were made to tighten up external communications, and for the first time all week, Murdoch lost control of the agenda.

Thursday saw the NoW battered by more hacking revelations, first by the announcement of the Kelly Hoppen privacy lawsuit by the BBC and the Guardian, then by new allegations about Glenn Mulcaire from Leslie Ash and Lee Chapman.

Yet even though Murdoch may have been surprised by the revelations, he is a veteran of many long takeover battles – from the year-long struggle to beat Robert Maxwell to the NoW in 1969, through to the dogged, successful pursuit of the Wall Street Journal in 2007.

He remained calm, but ready to move: "He knows the chips are down; he knows he has to act – but he'll do what he thinks is right, not be bothered by what the Guardian or the Independent write," said one source.

Significantly, it was on Thursday that he chose to lunch in the canteen with Colin Myler, the NoW editor, and a handful of senior staff.

Back in 1987, after a year of riots and intense criticism, it was Murdoch who prevailed in the original Wapping industrial dispute. By comparison, this week's events seemed less dramatic – but Murdoch also knows there is a long way to go before all the evidence about phone hacking is made public and the whole affair is laid to rest.

Murdoch's inner circle

Elisabeth Murdoch, chief executive officer of Shine

Rupert Murdoch's eldest child by his second marriage wants the backing of her father to help enlarge her television production company. That will bring her closer to the fold, but she doesn't want a greater role at News Corp, at least yet.

Matthew Freud, chairman of Freud Communications

The husband of Elisabeth and an independently wealthy, connected public relations man. He has the role of family disturber-in-chief, advancing his own views fearlessly when he chooses to and sometimes promoting the cause of his wife.

James Murdoch, chief executive, News Corp, Europe and Asia

The London-based heir presumptive to Rupert. He remained loyal to the family business, but was criticised for failing to defuse the phone-hacking crisis because of a combative personal style and lack of fingertip feel for the newspaper business.

Rebekah Brooks, chief executive, News International

The former Sun and News of the World editor who has been leading the company effort to resolve phone-hacking cases. Closely identified with her tabloid past and socially connected to David Cameron via the Oxfordshire set.

William Lewis, group general manager, News International

The energetic former Daily Telegraph editor, brought in by Brooks to act as a counterweight to the powerful editors at News International's titles. Allied to Brooks in efforts to make some hacking-related disclosures.

Lee Kuan Yew and Rupert Murdoch

Singapore is continuing its legal battle against the Wall Street Journal, charging opinion page deputy editor Melanie Kirkpatrick with contempt of court after fining the newspaper 25,000 Singapore dollars (($16,250) for three articles that “scandalized the court” last year. That’s the legal jargon. What won’t come out in court, however, is the really interesting bit – what the two men on the sidelines think of each other.
Minister Mentor Lee Kuan Yew, the architect of modern Singapore, and Rupert Murdoch, the new owner of the Journal, have a lot in common.
Murdoch, starting with the Adelaide newspaper inherited from his father, built up a global media empire. His News Corporation reported assets worth $50 billion as of December 31, 2008, and $33 billion in annual revenues. That’s $8 billion less than Singapore’s entire fourth quarter gross domestic product: 64.3 billion Singapore dollars or $41.7 billion. News Corp’s market capitalization at $15.6 billion today makes it worth twice as much as Singapore Airlines, the world’s largest airline by market value. SIA’s market capitalization today is about 12.3 billion Singapore dollars or about $8 billion.MM Lee, on the other hand, transformed Singapore from a colonial port and British naval base into one of the richest countries in Asia.MM Lee compared with other history makers
He can be said to be the most successful architect of a nation in the last 100 years.
Lenin failed to prevent the rise of Stalin – and the communist state he created has been dismantled.
Mao’s China is not today’s China. The communist leadership continues one-party rule but is turning the country into a market economy.
Nuclear-armed India, growing on an information technology boom, is not the India envisaged by Mahatma Gandhi, who was assassinated on January 30, 1948, just five months after Indian independence.
Fidel Castro — who came to power in Cuba in February 1959, only four months before MM Lee became prime minister of British-ruled Singapore – is still around. But Cuba has not enjoyed the same economic success as Singapore.
Nelson Mandela has certainly led South Africa out of apartheid and potential greatness, but he served only one term as president (April 1994-June 1999).
Ben Gurion’s Israel, Saudi Arabia, Hashemite Jordan are all mired in Middle Eastern problems.
Kemal Ataturk’s Turkey is now ruled by an Islamist party.
Ian Smith’s Rhodesia has become Robert Mugabe’s Zimbabwe – and continues to suffer unimaginable hardship.Fathers and sonsMM Lee, on the other hand, has the satisfaction of seeing his country prosper – under leaders who share his ideas. He is now Minister Mentor in a Cabinet headed by his son, Prime Minister Lee Hsien Loong.
Murdoch may have an heir apparent too. His son, James, is the chairman and chief executive of News Corporation, Europe and Asia.
Murdoch has enjoyed the same phenomenal success as a businessman as MM Lee has as a leader. He is the 132nd richest person in the world, worth $4 billion, according to Forbes.
He might have been worth more if News Corporation had not lost more than $6 billion in the quarter ended December 31, 2008, partly due to a writedown in the value of the Wall Street Journal publisher Dow Jones. At present, he is worth the same as Donald and Samuel Newhouse, who own the much smaller Conde Nast group (New Yorker, Vanity Fair, Vogue, Wired).
That is the thing about Murdoch. He is willing to go all the way for things he wants and vastly overpaid for Dow Jones. He became an American citizen to acquire American television stations and married his Chinese-born wife when he was active in Asia.
He has the same energy as MM Lee. When Peter Chernin stepped down as his deputy and CEO of Fox in February, he took charge of Fox himself. Visionaries
Now 78 years old, he still has visions for the future, embracing new technology. He is as keen on the internet as he has been on traditional media. He does not see the decline of the printed newspaper as the writing on the wall for news media. The format may change, but not the appetite for news and information. MM Lee, who will be 86 in September, has been a visionary too – he and those who worked with him in the early years. Singapore prospered by luring in the multinationals when they were viewed with suspicion in other newly independent countries in the post-colonial world.
His ingenuity shows also in the way his People’s Action Party has kept its grip on power ever since he became the prime minister in 1959. It has not only delivered good government and economic prosperity but also redrawn political boundaries and rewritten electoral rules.
Of the 84 elected members of parliament, only nine represent single-seat constituencies. The rest are elected from Group Representation Constituencies (GRCs), where people vote not for a single candidate but for a group of candidates. So, unlike, say, Barack Obama or Gordon Brown, Prime Minister Lee Hsien Loong or MM Lee himself has come to power not by defeating rival candidates in a direct face-to-face contest but as the leader of a team that beat an opposition team. The opposition claims it has problems finding enough candidates. The ruling party won 82 seats – 37 of them uncontested.
The government has also made it clear in the past that those constituencies which vote for it will get priority when it comes to upgrading public housing estates and other amenities. This can sway the people, 90 percent of whom are homeowners, mostly living in public housing estates.
Murdoch enjoys no similar advantage in his business dealings. He operates in a free market, though he has managed to grab a major share of the business in such lucrative media markets as London and New York. Who has more influence? MM Lee has said China and Russia are following the Singapore model. Murdoch’s Wall Street Journal also carries weight – certainly in Singapore. The government would not have taken the Journal to court if it thought the newspaper’s opinion was of no consequence.
Murdoch has a history of choosing winners – backing Margaret Thatcher and Tony Blair – though his reservations about Barack Obama’s economic policies obviously fell on deaf ears during the US elections last year.
Singapore and News Corporation have both suffered in the economic downturn. Exports – vital to Singapore’s prosperity – have slumped. The Government of Singapore Investment Corporation lost $33 billion last year, according to the Wall Street Journal, while Temasek Holdings, the smaller Singapore sovereign wealth fund, has reported a loss of $39 billion between March and November. Another Singapore strategy – to become the Switzerland of Asia – has also suffered a check. Singapore has agreed to relax its banking secrecy laws – which it beefed up in 2002 – just like Switzerland and other so-called “tax havens” have promised to under international pressure.
Singapore will no doubt find new ways to thrive in a changing world just as Murdoch has his visions for the future.
But who can tell what News Corp will be like post-Murdoch?MM Lee’s legacy will endure. A nation can’t be wound up like a business.

The News of the World phone-hacking scandal is spinning out of control.

The damage it will cause seems likely to spread far wider than News International, the newspaper's parent company controlled by Rupert Murdoch, though obviously it lies at the centre of the storm.

David Cameron's political reputation is at risk for having hired as his spin doctor Andy Coulson, the editor of the News of the World when phone hacking took place.

If Mr Coulson should be implicated – seemingly an increasingly likely outcome now that its former news editor Ian Edmondson is helping police with their inquiries – the Prime Minister's judgement and good sense will be seriously questioned.

The apparent feebleness of the Press Complaints Commission will probably lead to calls for the statutory regulation of newspapers. Inquiries into telephone hacking may spread to other titles. In fact, it is not too much to say that some sort of sea change may be taking place, with some politicians, resentful that they have been in the dock over expenses, turning not just on the delinquent News of the World but on newspapers in general.

How on earth did this happen?

How did a phone-hacking scandal on a Sunday "red top" become so big a story that it threatens to engulf people who must have imagined they were mere bystanders?

The main answer to that question is that News International has handled this affair abominably. Whether its senior executives have merely been devious and short-sighted, or whether they have actually colluded in criminality, remains to be seen.

Mr Edmondson was no bit-part player at the NOTW. He was its news editor, important enough to pick up an award on its behalf. He was also close to Mr Coulson, who brought him on to the paper. For more than four years, Mr Edmondson failed to disclose what he knew about phone hacking, and has done so only after lawyers acting for the actress Sienna Miller alleged his complicity last month, precipitating his suspension.

At the time of Mr Coulson's resignation as editor in January 2007, if not before, Mr Edmondson should have been dismissed, along with any executive who knew about the phone hacking.

As Rebekah Wade she was editor of the NOTW from 2000 until 2003 (when she was succeeded by her friend Andy Coulson) and then editor of The Sun from 2003 until her elevation to the upper reaches of management. I find it rather difficult to believe that illegal practices widespread while Mr Coulson was editor – in 2006, police seized material including 30 audio tapes which appear to contain recordings of voicemails and 91 PIN codes – were completely unknown to Mrs Brooks.

At any rate, her possible knowledge or involvement is a working hypothesis for anyone looking into this affair. And yet for the past 18 months, during which an apparent non-story has mushroomed into a scandal, Mrs Brooks has been News International's most senior executive, answerable only to James Murdoch, its chairman, and his father, Rupert.

She refused to appear in front of the Commons Culture, Media and Sport Committee investigating phone hacking in July 2009.

According to one of its members, Adam Price, the committee abandoned attempts to call her after some of its members became worried that their private lives might be investigated by red-top newspapers.

Mrs Brooks is a favourite of Rupert Murdoch, who flew from New York to London this week to deal with the phone-hacking scandal and revive his company's bid to take full control of BSkyB.

It is not necessary to prove that she had personal knowledge of phone hacking for him to conclude that she is not the right person either to sort out this mess or to restore the battered reputation of News International.

Appointing a former red-top editor with no commercial experience to be chief executive officer of the largest newspaper group in Britain was not the smartest move Mr Murdoch ever made.

Unless he can grasp this decisively, things will only get worse. Is he, at nearly 80, sufficiently on top of things? It is hard to know. What is certain is that Rebekah Brooks and James Murdoch have allowed a problem to grow into a crisis by failing to act earlier. The damage cannot be undone, but it could get much worse.

Of course, the matter is no longer only in Rupert Murdoch's hands.

Now that the police are involved again, they will be anxious to counter allegations that their previous investigation in 2006 was half-hearted and overly sympathetic to the News of the World. Andy Hayman, who as the Met's former assistant commissioner led that inquiry, subsequently joined News International's The Times as a columnist. That does not seem right to me.

I hope Mr Murdoch will bring a fresh broom, and I am almost certain that a more robust police investigation will lead to further prosecutions.

If these should include Mr Coulson, and a conviction were secured, David Cameron would be in a pickle.

Several people warned him at the time not to appoint Mr Coulson only six months after his resignation from the News of the World. To anyone who knew about newspapers, and especially Sunday ones, which employ many fewer journalists than dailies and deliberate more collegiately over their stories, it seemed almost inconceivable that Mr Coulson was not fully in the picture.

Whatever happens, Mr Cameron would be wise to put himself at a greater distance from Rupert Murdoch and his lieutenants.

What has the media mogul delivered to him?

Only the fervent support of The Sun, which did not win him the election.

Otherwise the association has brought him grief. And yet, after all that has happened, he found time to have dinner over Christmas at Rebekah Brooks' house in Oxfordshire in the company of James Murdoch. With a decision on the bid for BSkyB pending, this was an almost insane thing to do.

This scandal might never have resurfaced had it not been for The Guardian's Nick Davies, who in July 2009 revealed that News International had paid £700,000 to Gordon Taylor, chief executive of the Professional Footballer's Association, because the News of the World had hacked into his phone.

Mr Davies stuck to his guns and bravely took on News International. I do not share his views about the complete dysfunctionality of the tabloid Press, but it is impossible not to admire him. I once teased him for being "the sort of journalist who can find a scandal in a jar of tadpoles". This has turned out to be some jar.

Where will this end?

Not, I hope, in the demonisation of the entire Press and statutory regulation. If that is to be avoided, the News of the World, and other tabloids, must show that they do not believe they can act outside the law. It is incredible that, according to the BBC, a journalist on the Sunday red top allegedly hacked into the phone of interior designer Kelly Hoppen as recently as a year ago.

This nonsense must stop. Rupert Murdoch should put someone fit in charge of News International. The police must bring the culprits to court. And then, perhaps, we can begin to put back the pieces together again.

Will senior executives be prosecuted?

The contention surrounding the News of the World phone hacking case is that senior executives must have known that the practice was in wide circulation.

But, while perhaps morally wrong, simply being aware that reporters were engaging in such nefarious acts and doing nothing about it is not necessarily a crime in itself.

In Britain, even if you are aware of a criminal act taking place, you are under no obligation to tell the police. And to be implicated in a conspiracy you must do at least one overt act which shows you are helping that crime take place.

In the case of phone hacking that would be signing payments or directly instructing someone to hack into a telephone. Simply knowing it was happening and doing nothing to stop it is not necessarily a crime.

Mark Stephens, a media lawyer, said: "If I see my neighbour mugging someone I do not have to report it. The same principle applies here. Just because you know about phone hacking, does not make you guilty of anything.

"There is a slight difference though in that with a newspaper there is a command and control structure so if anyone at the top of that structure is doing anything that signifies their involvement then there could be issues for them. If you are actively party to something then you are involved, and that raises issues of whether or not you are part of a conspiracy."

Thursday, January 27, 2011

UK libel rules: Change the goddam law

One of the most confounding experiences a British visitor might have in the US is getting seriously sick without health insurance.

I believe a comparable experience – a mauling, a looking glass inversion of reality, a collapse of civilised norms – for an American in Britain is a libel reading.

Everybody in the UK seems to recognize the tangled condition of British libel laws – and there seems to be real interest in fixing them.

Indeed, the libel tourist – that cranky, deep-pocketed, opportunistic and thin-skinned individual who makes use of British libel laws to achieve satisfaction he would not have achieved in his own country – has become nearly a cultural fixture in Britain. But I'm not sure anyone has quite spelled out the sheer obnoxiousness and absurdity and mutilations of language endured by authors and, ultimately, by readers.

The British libel report into my own latest book, The Man Who Owns the News, which had already been edited and trawled over by lawyers in the US, is a massive document. Formal, dramatic, threatening in its implications.

I have never successfully wheedled out of a UK publisher the exact price they pay for a libel reading, but it is certainly a wonderful payday.

These external libel lawyers, without apparent access to a newspaper or to Google, flagged a passing reference in my last book to Michael Milken, the poster boy for 1980s Wall Street skulduggery and insider trading: "Please check there is evidence to prove, or he does not deny, that he was convicted of fraudulent practice." (This is not that dissimilar from having to check if the Twin Towers did, in fact, fall.)

"A statement is defamatory," explains the report in a long preamble about the nature of libel law in Britain, "and thus potentially libellous if it tends to lower someone in the eyes of right-thinking members of society generally.

Individuals can sue.

Most kinds of corporate bodies can sue.

Foreign nationals can sue here even if they live abroad, so long as the defamation has been published here and they have a reputation in this jurisdiction. No action can be brought on behalf of a dead person, although defamatory allegations about the dead … may defame the living."

I am in a particularly vulnerable and testy position in terms of British libel law because I often write about wealthy men with outsized egos who are the prime beneficiaries of British libel laws. Indeed, one of the effects of the libel laws in Britain is that the law, or interpretations of the law, have rather coalesced around the behaviour of the men who use the law.

London has arguably become one of the leading redoubts of the world's most obnoxious and unscrupulous because they are most protected here from anyone pointing out that they are obnoxious and unscrupulous.

In some sense then, British lawyers, who in my view are among the least socially astute and media-savvy people on earth (they all seem to be hidden-under-a-rock types – a characterisation for which they might sue me for libel), become in effect PR people – of an especially dithering and nervous sort – for the people the journalist is writing about.

Regarding all people as inevitable litigants, their job becomes to whitewash, sanitise, and spin the least critical thing that might be said about them.

Still, I believed that, for my last book, I had an ironclad protection from being sued.

My subject was Rupert Murdoch, who, in fact, as the proprietor of the Sun, the News of the World, the Times and the Sunday Times, has been sued more times for libel than anybody else in the UK.

He is a defendant, not a plaintiff.

Indeed, knowing as much about Murdoch and his business as anybody who doesn't work for him or is not related to him, I told the lawyers, Murdoch, simply, doesn't sue for libel.

This is partly because the man has an admirably thick skin (as well as a basic disregard for what anybody says about him), partly because so many people are saying such terrible things about him at such a fantastic rate that it would occupy all his time to sue, and partly because as a libel defendant he would not want to strengthen the arguments of libel plaintiffs by making them himself.

So safe? Yes?

Quite the opposite.

The more powerful you are in the UK, the richer you are, the more media savvy you are, the more you are to be feared in a libel court of law – even if you won't sue.

Every rich and powerful guy is a beneficiary of the other rich and powerful guys who have sued. "I know you might think that this is over-cautious, but gangsters have fought and won libel cases in the UK before now," I am told, as an explanation for why I should show special courtesy to Eastern European criminals as a class. Or in another admonition: "Some amazing scoundrels have lived prosperous and much-feted lives in the gap between what is true and what can be proved in a British court."

But, Rupert, he doesn't sue, ever.

"But he might." "But he won't."

But … and here it came: "Just because he won't sue, doesn't mean he shouldn't have the protection of people who would."

In essence, UK publishers and their lawyers, by anticipating what the rich and powerful will do – and invariably imagining the worst (certainly because, on the part of the lawyers, it is the most profitable and safest route) – do the work of the rich and powerful.

Curiously, the fear is not so much about saying something that people don't know – about revealing terrible secrets.

For the most part the worry comes about how you say what people already know. It's about the adjectives you use. It is about not offending anyone.

When I characterised a group of people who had inherited shares in a company, but had assumed no responsibility and taken no interest in it, as "business know-nothings," this was changed to "all but innocent in the ways of big business".

I described a consummate deal maker, famous for his feints and his crafty and arguably underhand strategies, as "tricking people". Could we make it, said the British lawyers, "outmanoeuvred?"

There are, in my last libel report, exactly 408 recommendations, admonishments, and causes for grave concern.

On every page of my book there was a skirmish, a confrontation, or a knock-down drag-out with the lawyers.

Now, I am more belligerent, nasty and argumentative than any lawyer and, in at least half of these assaults on language, I successfully used language – dripping scorn works – to beat them back. Still, many authors might not be so perpetually loaded for bear as me – and they'll have likely lost some of their choicest words.

Life is too short for this. Language is too important. Crooks ought to be called crooks. Buffoons out to be called buffoons.

Change the goddamn law. And fire the lawyers.

• This article was amended on 7 September 2010. The original said that Rupert Murdoch was famous for his "faints". This has been corrected.